🏠 House Price Forecasts Revised, PCL Down 4.8% & Budget Uncertainty | JLL's Residential Roundup

At JLL we typically try to limit our re-forecasts to two per year, usually May and November. With the Budget later than usual on 26 November we’re delaying our five-year update this year to early December. But in the meantime, we’re having to look again at our short-term outlook. 

UK economy stagnates

Most of the major house price indices are still showing price growth across all regional markets, but the rate of growth is slowing. Land Registry figures (to July) show average house prices rose 2.8 per cent annually, with more recent data from Nationwide and Halifax for September suggesting annual growth of 2.2 per cent and 1.3 per cent respectively.

Prices are rising most in lower value markets in the Midlands and North of England, as has been the case for a while now, with affordability pressures remaining less acute and purchasers needing to raise lower levels of debt (an important consideration at current higher rates).

There are some positive signs for the market: transactions continue to recover from their May 2025 trough following changes to stamp duty rates on 1 April and new commitments for mortgages nationally rose to their highest level since 2022 in Q3. Fixed rates have also dropped back, albeit remaining stubbornly above 4 per cent for all but the most favoured borrowers.  But of greater relevance in the short term is the nervousness around the state of the UK economy and the Budget, both of which we expect to continue to impact activity and prices for the remainder of this year and well into 2026. Remember, at an average of more than 200 days from listing to exchange, properties going under offer now won’t complete or show up in the house price statistics until the spring.

Consequently, we've revised our 2025 UK house price forecast downwards to +1.5 per cent from +3.5 per cent. 

Stronger growth in lower value markets persists

Higher value markets have seen more prospective buyers sit on their hands this year as political and economic uncertainty continue to limit activity.  This is evident geographically in higher value regions – London seeing the lowest annual price growth according to most house price indices – but also with higher price brackets at a local level. Zoopla reported prices rising most in markets where average values sit below £200,000, with prices static in areas where values exceed half a million. Buyer demand for homes priced at more than £500,000 fell 4 per cent in the five weeks to the end of September, with demand for homes at £1 million or more down 11 per cent.

This means we expect prices this year in London and the South of England will end either broadly flat or marginally down on where they were at the end of 2024. 

What about central London? 

The prime central London market has been hardest hit by changes to taxation, with successive increases to higher end rates of stamp duty, additional property surcharges and changes to the non-domiciled regime all impacting demand. Combined with a higher proportion of discretionary purchasers, many of whom can wait to transact, and increased uncertainty around the impact of the Budget on wealthier households, this has all resulted in a continued slowdown in interest from prospective buyers.

As a result, across our prime central London area we’ve seen achieved prices drop by 4.8 per cent annually in the year to Q3 2025 according to figures from LonRes, with our JLL PCL Index showing prices (based on valuations of a basket of properties excluding new homes) dropping 7.8 per cent annually in Q3. Of course, many vendors are choosing to wait it out rather than sell at a lower price, but for those keen to progress their sale, competitive pricing and the need to entertain lower offers has become more widespread. There are exceptions, with best-in-class stock still finding buyers and, in some cases, going to competitive bids, but this is far from the norm. Sellers of more compromised stock—including some lower ground floor flats, narrow townhouses, high-floor walk-ups, or properties in less desirable locations—face challenges securing buyers without more substantial price reductions.

With buyers waiting for clarity post-Budget, we now expect prices across central London will end 2025 down 5 per cent on 2024 (across both existing and new homes), against our previous forecast that prices would remain flat. Certain postcodes are expected to be harder hit than others, with markets traditionally appealing to a higher proportion of overseas buyers seeing more significant falls than more domestic markets, which could be more resilient. 

Awaiting Budget clarity

Market dynamics could shift significantly post-November 26th. Fundamental strengths persist due to limited new inventory and accumulated pent-up demand. The prospect of more clarity following the Budget - in some ways regardless of specific announcements - could, therefore, kickstart activity once again. But until then, much of the market - especially at the higher end - remains in wait-and-see mode.